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Congressional Testimony: Lee on USPTO Patent Operations


Written by Gene Quinn
President & Founder of IPWatchdog, Inc.
Patent Attorney, Reg. No. 44,294
Zies, Widerman & Malek
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Posted: July 30, 2014 @ 12:37 pm
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Michelle Lee, PTO Deputy Director

Later today, at 3pm Eastern, Michelle Lee, the Deputy Director of the United States Patent and Trademark Office, will testify at a hearing on Capitol Hill before the U.S. House of Representatives Subcommittee on Courts, Intellectual Property and the Internet. This panel, which is a subset of the House Judiciary Committee, is holding a hearing titled: U.S. Patent and Trademark Office: The America Invents Act and Beyond, Domestic and International Policy Goals.

In her prepared remarks, Lee substantively will begin by saying she is pleased that Congress approved “a FY 2015 appropriation bill that provides USPTO with the authority to spend anticipated fee collections as estimated by the Congressional Budget Office.” Sadly, this is something to be thankful for as odd as it seems. While significant user fees are generated by the USPTO, without the approval of Congress the USPTO cannot keep and spend the funds collected. Lee explained that by being granted permission to keep and use collected user fees the Office will “continue reducing the patent application backlog, shortening patent pendency, improving patent quality, enhancing patent administrative appeal and post-grant processes, fine tuning trademark operations, expanding our international efforts and investing in our information technology (IT) infrastructure.”

 

Greater Demand, Reduced Backlog

Lee will tell Congress that the USPTO is on pace during FY 2014 to receive nearly 600,000 patent applications. She will tell the committee:

Our patent application workload continues to increase at a healthy pace. In FY 2014, we expect to receive nearly 600,000 patent applications. That represents an increase of more than 5% as compared to FY 2013. Our backlog of unexamined patent applications is less than 620,000 which is down from more than 750,000 in 2009 (a 17.3 percent decrease). Our goal is to reduce the inventory of unexamined patent applications to a manageable level that will allow us to achieve optimal pendency by FY 2019.

In terms of processing applications, our first action pendency has been reduced to approximately 19 months and our average total pendency has fallen to approximately 28 months. Our plan is to reduce those periods to 11.3 and 21.0 months respectively by FY 2018.

On a cynical note, I will observe that reducing the backlog will become much easier for the USPTO, as will meeting pendency goals, based upon the United States Supreme Court’s breathtaking decision in Alice v. CLS Bank. While not a subject of this hearing, as more and more becomes per se unpatentable as the result of 35 U.S.C. 101, the USPTO should easily be able to meet these goals, particularly in light of the reality that over 50% of patents issued by the USPTO related to software innovations (see GAO report at page 12). Issued software patents and pending applications will be seriously impacted by the Supreme Court’s decision in Alice.

Of course, the Supreme Court’s interpretation of patent eligibility is not the fault of Lee or anyone at the Patent Office, but they will become the front line in the fight as they are already issuing Alice 101 rejections in applications where no previous patent eligibility rejection was made. The Office is also withdrawing Notices of Allowance even after the issue fee has been paid. This coupled with the USPTO interpretation of the Supreme Court’s decision in Myriad should make it relatively easy for the USPTO to achieve these goals.

 

Post Grant Proceedings

Lee will tell Congress that when post grant administrative trials were created by the America Invents Act (AI), the office anticipated that it would receive between 400 to 500 petitions a year. For FY 2014, the Patent Trial and Appeal Board (PTAB) is on pace “to receive filings of approximately 1600 – 1900 cases year…”

Lee will also tell the Subcommittee that the number of Administrative Patent Judges employed by the USPTO now exceeds 210, which represents an increase of 121% since the enactment of the AIA.

 

Improvements and Administrative Actions

Lee will also tout a number of administrative actions taken by the USPTo that offer a variety of improvements. Most of what appears in this section of her remarks reads as political speak aimed at making it seem like the government is doing something important. Those familiar with the patent system and patent practice will likely wonder how, or even if, any of these actions do anything to improve the system.

What follow is some discussion of the highlights.

1. Enhancing Claim Clarity

According to Lee claim clarity is being enhanced by “an extensive, multi-phased training program for all examiners focused on evaluating functional claims and improving examination consistency…” While I am a fan of education and training, like most patent practitioners I see very little consistency within the Office. In some Art Units it is virtually impossible to get a patent, in other Art Units they issue patents on virtually every application. There is a growing and concerning disconnect between what is considered obvious for high-tech, complex innovations and what is considered obvious for the lowest-tech inventions such as ordinary gadgets. Ironically, the more rudimentary the innovation the less likely it will be obvious, which can’t make sense to anyone.

Claim clarity is also being enhanced through”extensive stakeholder outreach and engagement… and insights on enhancing claim clarity and improving overall patent quality.” This sounds good, and the USPTO has been much better about accepting industry feedback during the Obama Administration, but I have to question whether talking about claim clarity actually achieves claim clarity. Talking about a problem doesn’t solve the problem, and frankly the problems associated with lack of claim clarity have been caused by the courts. Patent claims and patent applications in general have become far more complex, longer, more detailed and increasingly obfuscate “the invention” as the result of judicial decisions. So we can talk about the issues all day and all night and it won’t matter until Judges, particularly Supreme Court Justices, get on board (which should happen at or about the time that pigs grow wings and begin to fly).

The final way the claim clarity is being improved is through the USPTO Glossary Pilot Program. Truthfully I am not optimistic about this pilot since this is one area where the law is extraordinarily clear. If you define a term it has the meaning you give it in the specification. If you do not define a term then the ordinary plain meaning as would be understood by one of skill in the art is given. Yes, there is a lot of litigation about what terms mean, but that is the essence of patent litigation and interpreting patent claims. Unless the law is changed to require all terms to be defined in a patent application I don’t see how this helps.

2. Empowering Consumers and Main Street Retailers

Lee will tell Congress that retailers, consumers and small business are being increasingly targeted in patent litigation, which is certainly true. She will go on to say that in order to “level the playing field and ensure individuals and businesses know their rights and are aware of available resources before entering into costly litigation and/or settlements, the USPTO has launched a useful online toolkit of information.”

I have poked fun at this in the past, and I will again now. The USPTO posting information on their website is fine, but to tout this as some great achievement that will empower those who are targeted by patent trolls is a stretch to say the least. Moreover, the information contained in the USPTO online toolkit is completely one-sided and makes it seem like all patent owners who seek redress for infringement are patent trolls. Still further, while the USPTO does suggest that it may be helpful to contact an attorney, it is also suggested that an attorney may be unnecessary for basic, preliminary communications with the patent owner or patent owner’s representative, which is undeniably bad advice. No patent attorney would ever recommend that an unsophisticated client independently contact a patent owner who is asserting a claim or threatening to sue.

 3. Crowdsourcing Prior Art

Lee will tell Congress that “the USPTO is exploring a series of measures to make it easier for the public to provide information about relevant prior art in patent applications, including by refining its third-party submission program, exploring other ways for the public to submit prior art to the agency, and updating its guidance and training to empower examiners to more effectively use crowd-sourced prior art.”

While crowdsourcing is a hot topic in general, the unfortunate reality is that the provisions of the America Invents Act (AIA) that allow for the public to submit prior art for examiners to review have been so under utilized that they can only appropriately be labeled a complete failure. Indeed, during the first 15 months one could make a third-party preissuance submission there were only 1,228 such submissions filed, During this same time there were never fewer than 584,998 applications at the Patent Office awaiting first action. For more see USPTO Seeks Comments on Crowdsourcing Prior Art.

 4. Cooperative Patent Classification 

Lee will tell Congress that the USPTO, in cooperation with the European Patent Office, continues to move forward toward implementing the Cooperative Patent Classification (CPC) system, which first launched in January 2013.

This is one area where I think that Lee is under selling the importance of an initiative. Over the years the U.S. Patent Classification System became obsolete. It wasn’t updated continually to keep up with the changing technology and innovation landscape, which meant that rather than creating new classifications the Patent Office would continue to force new technologies into old categories. While the best patent search continues to rely on finding the most relevant patent classification and then looking at all the references within that classification, an improved classification system and generous examiner training on the new system should dramatically improved patent quality by making it much easier for patent examiners to in a realistic time frame find the best prior art currently available.

Of course, the sad reality is that this type of administrative action and its importance is really known to those familiar with the patent system. Ironically, those line items that represent little or no useful advance seem to sound quite good to the public and politicians, while what really will make a difference comes across as difficult to understand are hardly important.

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Posted in: Congress, Gene Quinn, Government, IP News, IPWatchdog.com Articles, Patents, USPTO

About the Author

is a Patent Attorney and the founder of the popular blog IPWatchdog.com, which has for three of the last four years (i.e., 2010, 2012 and 2103) been recognized as the top intellectual property blog by the American Bar Association. He is also a principal lecturer in the PLI Patent Bar Review Course. As an electrical engineer with a computer engineering focus his specialty is electronic and computer devices, Internet applications, software and business methods.

 

17 comments
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  1. Gene,

    I wonder if anyone will question Lee as to her legal authority to be in her present position at the USPTO.

  2. EG-

    I doubt it. It looks like she will run the agency throughout the Obama term, as the Washington Post is reporting that Phil Johnson’s nomination is dead — killed by Google and other high tech companies. See:

    http://www.washingtonpost.com/blogs/the-switch/wp/2014/07/30/how-patent-reforms-fraught-politics-have-left-uspto-still-without-a-boss/

    I know that others have gotten quite upset about her lack of legal authority. I haven’t, although I certainly understand that point of view. I haven’t followed that path for several reasons. First, Dennis and Hal have more than adequately set the issue up. Second, this type of ultra vires activity seems to be the new norm in DC, which goes a long way to create a constitutional crisis I’m afraid. Third, there are more important issues associated with patent politics and policy. Fourth, from what I hear Lee is running the USPTO well, the career folks are given latitude, and without Lee what the Obama Administration would have already done/said would have been worse.

    -Gene

  3. You hit the nail on the head: reducing pendancy by finding all sorts of reasons to deny a patent. This is a recipe for problems. As we saw under Dudas’s reforms, Applicants will sue, win, and then the applicants will be entitled to additional PTA for all the years spent in limbo. Then you will have other people complaining about all the patents with long terms on old technology: a backlog of Gilbert Hyatts.

  4. Now showing live for those who want to watch:

    http://judiciary.house.gov/index.cfm/2014/7/the%20u.s.%20patent%20and%20trademark%20office:%20the%20america%20invents%20act%20and%20beyond,%20domestic%20and%20international%20policy%20goals

  5. I don’t think you can place the blame for lack of claim clarity with the courts. The responsibility for clarity lies first and foremost with the attorney who writes them.

    As I have mentioned before, the USPTO doesn’t go out of its’ way to advertise the third party submission program.
    There is no direct link to EFS-web submission on the USPTO home page, nor is it mentioned on the FAQ page.
    espacenet, on the other hand, has a “submit observation” link under the EP register page for each application. So it isn’t surprising that the US system is under-used.

    Take a look at the Australian third party submission system – basically they just say, “send us an email about it”. I’ve tried it – it works.

  6. Benny at 5.

    By their nature, patent attorneys are “reactive” they write patents in response to the statutes and the rules and how the statutes and rules are interpreted by the courts and the USPTO. Patent attorneys do not write the laws and rules; we react to the laws and rules that are in front of them.

    From what I have seen of the interpretation of claims in various court cases, I think at least some patent attorneys have been writing “unclear claims” because many courts have interpreted unclear claims in a favorable manner. I have also repeatedly heard from patent litigators that there are advantages to writing claims that are ambiguous and to not provide definitions of claim terms in applications for this reason.

    Conversely, if the courts consistently interpret claims narrowly that have ambiguous language and include terms that are not defined, I think you will see claims written with clearer language and definitions to ensure that claim terms are interpreted in the manner the applicant intended.

    If the courts reward unclear claims, there will be more unclear claims written by patent attorneys. If the courts reward clear claims, there will be more clear claims written by patent attorneys.

  7. Not sure why you say she is doing a good job, Gene. She is the one behind the Alice shake down that is causing massive trouble and is highly questionable in its support from Alice.

    To my mind, Lee is by far the biggest danger right now to patents. To my mind she is a shill for Google and this Alice massive 101 rejections proves it. The best thing that could happen right now is to get her out of there and put in another Kappos. Alice is untenable and amounts to the PTO saying you are rejected ’cause we don’t like you. And, Lee is leading the charge and extending Alice. I’d say that Lee will cause more damage to the patent system than Dudas by far. She is much clever and backed by many Google intellectuals. And, she is —to my bet–awaiting a giant pay day from Google when she leaves (just like Obama’s finance boys).

  8. Not to echo EG too closely, but given the rationale for having Miss Lee in the position that she is in (without a true director), is that she is merely performing the administrative acts that make up the only power that could be handed down without a director, do any of her remarks that go to policy de facto become ultra vires?

    Or is there no real reason why the position that has been vacant for so long need the ‘vetting” procedure that it has?

  9. To all:

    It looks like Lee took some static at the oversight hearing, including with respect to the proposed “attributable ownership” rules which were rightly characterized as “draconian” by Goodlatte. Also, as reported by the IPO Daily News, Rep Delbene (D-Washington) “expressed concern over reports that some patent examiners are rejecting all claims for software-related inventions in light of the Supreme Court’s Alice Corp. decision.”

  10. Rep Delbene (D-Washington) “expressed concern over reports that some patent examiners are rejecting all claims for software-related inventions in light of the Supreme Court’s Alice Corp. decision.”

    It is outrageous behavior in light of the fact that she was hired by Google. Actually, a friend pointed out a bizarre consequence of the recent SCOTUS ruling. That now that corporations are people, Lee can say she is serving the American people in serving Google.

  11. [I just posted this in an older thread, but since page 2 threads are rarely visited, I am reposting here]

    See this video of Michelle Lee: https://www.youtube.com/watch?v=mG0VoZcia2A .@11:53, “Patents are not the only drivers of innovation. The first entity to bring a product to market has a first mover advantage that provides an incentive to innovate on its own, whether or not a patent is sought or granted. Some firms opt for an open source model where they benefit from the network effects of widespread adoption of the technology they’ve developed. We also know that reputation and branding with or without a trademark, plays a large role in facilitating innovation and of course large numbers of innovations are protected by trade secrets and copyrights, but not patents.”

    @25:25, [CLS Bank] “likely lays the groundwork for more aggressive challenges to these types of patents…”

    If you watch the entire video, it is clear what her agenda is. I don’t think Hirshfeld is the problem.

    I never thought I’d say this, but I would even put John Doll back in over her. Is there some way we can get rid of her?

  12. Thanks Patent Leather

    I feel like I’m watching a brainwashed robot.
    Clarity?
    inNOvation?

    God help us.

  13. Since Lee is not actually the director, I would seriously like to know who is pulling the strings within the system. I really do not think that it is Lee – she appears to be too obvious a front, a bag man, a fall guy.

    I do believe that the system has been captured (much like the S&L and banking debacles). And I do find it odd that the media seems to be captured as well, given the lack of attention on the anti-patent moves by the system that should naturally be pro-patent.

  14. 11. Patent leather.

    To my mind, we have lost. I think there is no chance there is going to be patents in 10 years. The corporate money is too much to fight. I mean look at how outrageous Lee is. She was hired (approved and then hired by business people). She doesn’t even deny that her plan is to go back to Google to collect $10 million for her role as director of the PTO.

    And, what is happening now? Obama is desperate for money for the Democrats. How much is he getting for the next Fed. Cir. judge to replace Rader? We can bet that we are going to get a virulently anti-patent judge. Probably pharma, but virulently anti-patent otherwise.

    MY PREDICTION: The next giant battle is going to be to bifurcate the system. Pharma and EE/CS/Mechanical. That’s my bet. I think Johnson was nothing more than a gambit by Obama. He did it to illustrate the great divide and tee up a bifurcation.

  15. 13: Anon.

    Exactly!!!! I am sure that she is using the brain trust of Google. She will be paid $10 million for her role just like the bank regulators get paid off.

  16. The point that I wanted to stress NWPA was one less of particular connections, and one more of the overall process meant to keep in check the risk inherent in too much power in an administrative agency.

    When we allow our system of checks and balances to run unchecked, we invite – no, we are complicit – in the abrogation of those checks and balances. Here, I mean the royal “we.” Exactly why did the congressional judiciary committee NOT nail Miss Lee to the wall for performing a duty she is clearly not allowed to under the law: she performed as a fully functioning director.

    I am infuriated with the “leadership” as provided by Mr. Coble. His introduction to Miss Lee was less about the issue and more about grandstanding for a particular desired end result. This is not the type of leadership we need for this subcommittee of Congress.

    This all the more points to me that Miss Lee is a mere pawn and I wonder (still) where the real power is being wielded from.

  17. Another caught in filter – please post one and delete the other.

    The point that I wanted to stress NWPA was one less of particular connections, and one more of the overall process meant to keep in check the risk inherent in too much power in an administrative agency.

    When we allow our system of checks and balances to run unchecked, we invite – no, we are complicit – in the abrogation of those checks and balances. Here, I mean the royal “we.” Exactly why did the congressional judiciary committee NOT nail Miss Lee to the wall for performing a duty she is clearly not allowed to under the law: she performed as a fully functioning director.

    I am infuriated with the “leadership” as provided by Mr. Coble. His introduction to Miss Lee was less about the issue and more about grandstanding for a particular desired end result. This is not the type of leadership we need for this subcommittee of Congress.

    This all the more points to me that Miss Lee is a mere pawn and I wonder (still) where the real power is being wielded from.

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